Wayzata Enterprises, Inc. v. Herman
| Decision Date | 24 April 1964 |
| Docket Number | No. 39212,39212 |
| Citation | 268 Minn. 117,128 N.W.2d 156 |
| Parties | WAYZATA ENTERPRISES, INC., Appellant, v. David HERMAN and Alan Herman, separately and jointly, and Herman Realty Company, a co-partnership, Respondents. |
| Court | Minnesota Supreme Court |
1. Upon a default in the performance of a contract for deed for the purchase of real estate, the vendor has his option of suing on the contract or canceling the same. If the vendor chooses to cancel the contract, he cannot thereafter recover payments due under the contract. When notice of cancellation is served pursuant to Minn.St. 559.21, the vendee has his option within the 30-day period provided by statute to make good the default or to permit the cancellation to become effective.
2. Delivery of a check is not payment unless the parties expressly agree that it shall be so.
3. When it is claimed that a check was accepted as payment, the burden rests upon the one asserting that to be a fact to prove it.
4. The presumption is that a check is a conditional payment only and until the check is paid the debt remains. Upon payment of the check, the debt is deemed to have been discharged when the check was given.
5. The drawer of a check has the power of revocation until the check is presented for payment.
6. A check is not an assignment of the funds in the bank but only an order authorizing the bank to make payment upon presentation.
7. Where payment of a check is stopped before it is presented for payment, it is generally held that the relation between the drawer and payee becomes the same as if the check had been dishonored.
8. The evidence in this case sustains the court's finding that there was no payment made which would remove the default upon which the cancellation of the contract was based; hence, the cancellation became effective and the vendor could not thereafter recover any part of the debt arising out of the contract.
Affirmed.
Gray & Gray, St. Paul, for appellant.
Brill & Brill, Minneapolis, for respoondents.
This is an appeal from an order denying plaintiff's motion for a new trial.
The facts are not in dispute. On October 1, 1959, plaintiff, as vendor, and defendants, as vendees, entered into a contract for the purchase of certain real property in the city of Minneapolis, the description of which is unimportant. Defendants agreed to pay $70,000 for the property, of which $5,000 was paid in cash, and they agreed to pay the balance at the rate of $500 per month the first year and $600 per month thereafter. On December 19, 1960, defendants were in default on the contract in the sum of $2,537.30. Plaintiff thereupon served notice of cancellation of the contract under Minn.St. 559.21. Within the 30-day period allowed by law, defendants issued and delivered to plaintiff their check for $3,137.30, dated January 13, 1961, which amount would cover the default and the current payment then due. Before the check was presented to the bank, defendants stopped payment, and plaintiff thereupon brought suit on the check.
The trial court held that plaintiff had served notice of cancellation of the contract and that, inasmuch as the check was not paid, the cancellation was effective and plaintiff could not thereafter recover the payments due on the contract. The only question involved in this case is what effect stopping payment of the check had on plaintiff's right to recover thereon.
1. The law in this state is clear that when there is a default in the performance of a contract for deed for the purchase of real estate the vendor has his option of suing on the contract or canceling the same. If he chooses to cancel the contract, he cannot thereafter recover the payments arising out of the contract. When notice of cancellation is served pursuant to § 559.21, the vendee has his option within the 30-day period provided by statute to make good the default or to permit the cancellation to become effective.
The pertinent portion of § 559.21 reads:
'When default is made in the conditions of any contract for the conveyance of real estate or any interest therein, whereby the vendor has a right to terminate the same, he may do so by serving upon the purchaser * * * a notice * * * stating that such contract will terminate 30 days after the service of such notice unless prior thereto the purchaser shall comply with such conditions * * *.
'If, within the time mentioned, the person served complies with such conditions * * * the contract shall be thereby reinstated; but otherwise shall terminate.'
We have frequently held that when a vendor cancels the contract under this statute he may not collect unpaid installments due on the contract. 1 We have also held that when the vendor takes title back from the vendee he may not recover on a promissory note executed for the balance of the purchase price. 2 He may not recover on a judgment based on a default which occurred prior to that on which the cancellation is based. 3
2. Delivery of a check is not payment unless the parties expressly agree that it shall be so. 4
3. When it is claimed that a check was accepted as payment, the burden rests on the one asserting that to be a fact to prove it. 5
4. The presumption is that a check is a conditional payment only and until the check is paid the debt remains. Upon payment of the check, the debt is deemed to have been discharged when the check was given. 6
If the check in this case had been presented and dishonored for lack of funds in the bank, there could be little question that the debt was not paid, and the cancellation would have been effective. The only question then is: What effect did the action of the vendees in stopping payment have upon the cancellation of the contract?
5. It is undisputed that the drawer of a check has the power of revocation until the check is presented for payment. 7
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...areas of the law also indicate that payment is made prior to the time of deposit of the check. See e. g., Wayzata Enterprises, Inc. v. Herman, 268 Minn. 117, 128 N.W.2d 156 (1964) (payment on real estate contract is deemed to be made as of delivery of check when check is subsequently paid i......
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...creditor has authorized the money to be thus delivered to him. 60 Am.Jur.2d, Payments, § 17, p. 622.9 See Wayzata Enterprises, Inc. v. Herman, 268 Minn. 117, 128 N.W.2d 156 (1964); Smith v. American Mutual Liability Ins. Co., 174 So.2d 878 (La.App., 1965).The United States Court of Appeals ......
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